How the Wife Prevented Her Husband from Losing the House: A Case Study
Do you Really Need a Family Trust to Run Your Business?
One of my older clients is a local woman, Angela. Angela is married to John who runs a local business, and a couple of years ago she became concerned that her husband’s business began accumulating debts. She could see that it was a good business and her husband was making decent money, but he had to keep ordering more and more trading stocks, while for the people who owed him money it took longer and longer to pay them. John told Angela that it was just the way of business and there was no need to worry. Angela, however, decided to come and see me, so we had a discussion about how we could protect the family house from expropriation due to debts.
“I know that there should be an option to protect the house we are living in, in case things go really bad,” Angela said.
As their legal adviser, I sat down with Angela and John and explained that while their business was making good money there is always a risk that things will go wrong at some point. I suggested that to set up a family trust with a company trustee to run their business. That way, the debts incurred by the business will be in the name of the family trust and not on them personally. This separates out the assets away from their own names as they owned their house in their own names.
Losing Your House to the Tax Office is a Real Risk
Things went well for the couple of years and I didn’t hear back from Angela and John for a while. Until one day I got a call from John saying that he had a huge debt from the Tax Office that he said had just crept up on them. John and Angela had been receiving the surprise tax bills, and they couldn’t see why they were not able to repay them. The Tax Office wouldn’t budge and so proceeded to attack the family trust. As there weren’t many assets in the family trust to put into liquidation, the Tax Office even wanted to come after John and Angela personally. However, John and Angela had otherwise been lodging their tax returns on time and paying as much as they could.
“I am really lucky to have such a smart wife,” John said. “If it weren’t for Angela’s thinking ahead those couple of years ago, we could have lost everything.”
Because I see so many people like this couple, I came up with the idea of Ailira, Artificially Intelligent Legal Information Research Assistant. Ailira can help by answering a wide range of questions about business structuring, for example. Ailira’s main purpose is to provide free information, answer questions, and also set up instructions for you so you can protect your assets just like John and Angela did.
Want to try for yourself? Chat to Ailira at www.ailira.com.